Hydrogen Agency Lhyfe Pretends Minor Income Acquire Overcomes Technique Failures & Huge Web Losses

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Lhyfe’s current press launch—one other simply earlier than Christmas, finish of the week, hope nobody notices effort like others I’ve assessed in current days—reported on within the often glorious Hydrogen Perception trade publication, claims that revenues doubled in 2025 and that the corporate is now strategically refocusing and reducing bills for 2026. On the floor, this seems like progress and self-discipline. In observe, it follows a well-known sample seen repeatedly in hydrogen for power firms. Relative progress charges are highlighted as an alternative of absolute scale, structural losses are downplayed, and narrowing scope is framed as strategic readability relatively than retrenchment. Doubling income from a small base doesn’t deal with whether or not the enterprise mannequin is viable. It features as a rhetorical gadget, one which creates the looks of momentum whereas masking deep weaknesses. This sample has proven up throughout hydrogen mobility, hydrogen heating, and inexperienced hydrogen provide performs, and it hasn’t ended nicely but, and is unlikely too.

What’s really occurring is that Lhyfe grew income from €5 million, a nothing burger in industrial agency phrases, to €10 million. In the meantime, prices remained a lot greater than income and so they ended the yr with continued large web losses, €21.7. That’s higher than the web lack of about €29.1 million of 2024 and the web lack of about €33.5 million the yr earlier than, however this isn’t a development that’s resulting in revenue, its simply burning money.

In that context, reducing out the individuals who even have engineering, procurement and development expertise, a part of a 30% value take out effort for 2026, is simply going to gradual the bleeding considerably, and convert the EPC euros into engineering consulting agency fingers. The one means that makes financial sense is that if Lhyfe was paying their EPC workers Silicon Valley charges, which there isn’t any proof to assist. Public reporting on Lhyfe’s H1 2025 accounts exhibits personnel bills elevated solely modestly (about €0.5m) in contrast with H1 2024, whereas headcount remained roughly steady round 196–198 staff, suggesting total workers compensation traits weren’t the dominant value driver in comparison with exterior bills. Reducing 20-50 EPC isn’t going to make up the losses, nevertheless it’s definitely going to make Christmas sad in a bunch of properties.

In different phrases, claims of doubling income and blaming governments are rhetorical methods to make a really dangerous yr and a worse yr to come back sound like a win by a scrappy underdog.

A helpful approach to assess Lhyfe’s scenario is thru Richard Rumelt’s framework for good technique. Rumelt argues that technique rests on three components: a transparent analysis of the issue, a guiding coverage for addressing it, and coherent actions that align with that coverage. When firms battle, it’s typically not as a result of they lack effort or competence, however as a result of they misdiagnose the issue they’re attempting to resolve. Lhyfe’s press launch and said refocus present a transparent window into how the corporate is diagnosing its scenario and the place that analysis goes fallacious.

The specific analysis in Lhyfe’s messaging is that the inexperienced hydrogen market exists and is rising, however that exterior elements corresponding to regulation, allowing, and coverage uncertainty are slowing deployment. Income progress is offered as proof that demand is actual and increasing. From this angle, the duty for administration is to sharpen focus, scale back prices by about 30%, outsource engineering and development, and focus on probably the most promising finish markets. This analysis treats the issue as one in every of execution pace and political friction relatively than market fundamentals.

An alternate analysis, grounded in observable actuality relatively than fantasy and investor relations, seems completely different. Outdoors of legacy industrial hydrogen makes use of, demand stays fragmented, intermittent, and coverage pushed. Prices stay excessive, utilization stays low, and clients not often decide to long run, unsubsidized offtake. On this context, income progress displays the persistence of subsidies and pilot applications, not the emergence of autonomous markets. Treating this as a short lived slowdown attributable to regulation misses the structural mismatch between inexperienced hydrogen provide economics and buyer willingness to pay.

The income doubling itself illustrates this hole. Lhyfe’s revenues elevated from a small base to a nonetheless small absolute degree, whereas working prices, capital depth, and stability sheet pressures stay giant. Industrial power firms don’t survive on relative progress charges. They survive on scale, margin, and sturdy contracts. When income progress is highlighted the ultimate consideration to losses and money burn, it indicators an try to handle notion relatively than confront fundamentals. Rumelt warns that complicated objectives with technique is a standard failure. Income progress is a metric, not a analysis.

One of many pillars Lhyfe continues to emphasise is hydrogen mobility. This consists of buses, vehicles, refueling hubs, and captive fleets. The persistence of mobility within the technique is telling. Hydrogen mobility demand has not emerged as a result of it outcompetes options. It has emerged as a result of governments funded automobiles, stations, and gas, typically in parallel. Battery electrical choices have continued to enhance in value, reliability, and infrastructure effectivity, whereas hydrogen mobility has struggled with uptime, gas value, and utilization. The demand that exists is protected and conditional. It will depend on subsidies, mandates, and political curiosity.

By retaining mobility as a core market, Lhyfe is implicitly assuming that this protected demand will stay steady or develop. That may be a dangerous assumption. Coverage assist is episodic, budgets change, and procurement priorities shift. In Rumelt’s phrases, it is a misdiagnosis of leverage. The corporate is treating politically created demand as if it had been market pull. That mistake has already led many hydrogen mobility tasks to stall or collapse as soon as pilot funding ended.

It’s price reminding ourselves that this yr noticed:

• French hydrogen taxi agency Hype pivot completely to battery electrical
• international hydrogen gas cell automobile gross sales collapse to approaching nothing outdoors of fifty% to 60% subsidy offering South Korea
• Shell getting out of the hydrogen refueling station enterprise completely
• the variety of hydrogen refueling stations outdoors of South Korea decline by giant numbers
• gas cell heavy truck gross sales dropping whereas battery electrical heavy vehicles soared in China
• mining large Fortescue formally giving up on hydrogen and ordering billions of {dollars} price of totally electrical mining vehicles and gear
• Stellantis, GM, Daimler, Honda and Man withdraw from hydrogen vehicles
• hydrogen truck producers Hyzon, Nikola and Quantron bankrupt, together with many, many different corporations within the hydrogen for transportation area
• Cummins begin a strategic evaluation of its failing hydrogen division, seemingly resulting in reducing it in 2026
• the UK’s HyHaul hydrogen freight hall being shelved
• hydrogen bus targeted Van Hool going bankrupt
• hydrogen truck and bus gas cell producer McPhy going out of enterprise
• hydrogen gas cell for transportation producers Ballard Energy, Gas Cell Power and Plug energy bleeding unprecedented quantities of cash amid collapsing inventory costs, reverse inventory splits, and geographical and section retrenchment
• Quite a few transit businesses, together with most lately Dijon in France, abandon their hydrogen bus acquisition efforts
• 26 Polish cities who had purchased or had been shopping for hydrogen buses begging the nationwide authorities for deep subsidies to pay for the gas they came upon was really very costly
• Decrease Saxony abandon its hydrogen prepare plans, with solely 4 of 14 nonetheless operational
• prepare producer Alstom drop hydrogen trains
• BP axe its hydrogen fuels division
• Airbus shelve its hydrogen aviation program
• and so forth, and so forth, and so forth, and so forth

In opposition to this twice-weekly drumbeat of hydrogen for transportation failures in 2025, Lhyfe’s technique for 2026 is to maintain specializing in hydrogen for transportation, an area the place it’s not remotely differentiated towards a lot greater and extra credible gamers.

Refineries kind the second pillar of Lhyfe’s refocused technique. At first look, this seems extra credible. Refineries are giant hydrogen shoppers and face rising strain to scale back emissions. The issue is that refineries already meet most of their hydrogen wants by by product streams from their very own processes and thru gray or blue hydrogen produced on web site. These sources are low-cost, dependable, and built-in into refinery operations. Hydrogen is a course of enter, not a discretionary buy.

For refineries to purchase inexperienced hydrogen from an exterior provider like Lhyfe, they would want both a regulatory mandate that excludes blue hydrogen or subsidies that erase the associated fee premium. In different phrases, inexperienced hydrogen in refineries features as a compliance value, not a aggressive enter. Treating refineries as a scalable market misunderstands how refinery economics work. In Rumelt’s framework, this once more displays a misdiagnosis. Pressured substitution is being mistaken for willingness to pay. That’s not a basis for sturdy technique.

Industrial, high-temperature warmth is the one industrial demand space Lhyfe has achieved any work in. There are particular excessive temperature processes the place flame traits matter, as chemical processing plant designer Paul Martin has helped me perceive, notably in some ceramics functions and in components of cement clinker manufacturing. These circumstances are actual, however they’re slender. They signify a small share of business warmth demand and don’t outline the sector as an entire. Even inside these niches, electrification choices corresponding to plasma heating, resistive techniques, and thermal storage are advancing.

Extra importantly, industrial warmth decarbonization already has a less expensive, less complicated, and extra dependable pathway in lots of areas: biomethane from waste biomass utilizing anaerobic digesters. Biomethane can immediately substitute for fossil pure gasoline with out reengineering burners, furnaces, or kilns. It doesn’t require new tanks, new pipelines, or new security regimes. It suits present infrastructure and operational practices. Inexperienced hydrogen combustion, in contrast, requires redesign of burners, adjustments to supplies, new storage techniques, and new security protocols. It’s troublesome to justify when a drop in gas various exists. For industrial operators, this issues greater than rhetoric and imaginative and prescient.

In consequence, inexperienced hydrogen is unlikely to service industrial warmth markets at scale, even within the small slices the place flames matter. Biomethane undercuts it on value, simplicity, and reliability. Electrification undercuts it on effectivity and long run trajectory. For these within the topic, Paul Martin and I spent 90 minutes working by your complete sector (half 1, half 2). Treating industrial warmth as a significant hydrogen market displays one other class error, complicated technical feasibility with financial attractiveness.

When these three pillars are examined collectively, a sample emerges. Lhyfe’s strategic refocusing removes some peripheral actions and reduces inside prices, nevertheless it doesn’t right the underlying idea of worth. Mobility stays as a result of it’s seen and backed. Refineries stay as a result of they give the impression of being giant on paper. Industrial warmth stays as a result of hydrogen for power varieties don’t perceive the purchasers or the competitors. None of those present robust leverage or sturdy benefit.

A coherent technique, in Rumelt’s phrases, would require a unique analysis. It could acknowledge that hydrogen demand outdoors legacy chemical feedstocks is coverage constructed and structurally deprived. It could focus effort on makes use of the place hydrogen is unavoidable and the place clients can assist long run contracts with out steady subsidy. It could align capital deployment, organizational design, and partnerships round these realities. Lhyfe’s present actions enhance effectivity, however they don’t align with such a analysis.

Looking forward to 2026, this issues. Price reducing and outsourcing engineering scale back burn price, however additionally they scale back optionality. When paired with unstable demand segments, they enhance dependence on coverage timing and grant continuity. Historical past means that this mix doesn’t result in restoration. It results in additional rounds of retrenchment, asset gross sales, or dilution.

Lhyfe is headed for chapter. They’ve €65 million left of €228 million in governmental grants with €25 million in debt. This can maintain them limping alongside for a few extra years, one assumes, however that’s it. Until they settle for empirical actuality and cease relying solely on governmental largesse—which is quickly diminishing in France because the Court docket of Auditors has declared that hydrogen street freight is an absurdly costly carbon mitigation wedge and the French senior financial council has weighed in to level to battery electrical street freight as the apparent selection—they’re merely going to evaporate.

Lhyfe’s press launch reads as an try to regain management of the narrative. It’s clear that the corporate doesn’t perceive the markets it’s attempting to serve or the competitors. With out correcting that, strategic focus and price reducing is a beauty train. In power transitions, physics, economics, and infrastructure realities are unforgiving. Firms that misdiagnose these realities not often get limitless probabilities to regulate.